Paid Up GUL Question

[scagnt83]

Okay, I guess I misread the earlier text. I have always understood the guaranteed to be guaranteed, but I read the earlier posts to mean that was not the case with a UL. I was trying to figure out why. Thanks for clarifying that.

Whatever the Guaranteed column says is Guaranteed. As long as you pay the Premium listed on the Guaranteed Illustration, you will get the CV and DB listed on the Guaranteed Illustration.


Im not going back and rereading everything. But DHK was probably talking about how UL does not have a "Base Premium" which guarantees the policy will stay inforce. UL has a Minimum Required Premium, but that will not keep the policy inforce to age 100. You must find the Premium that it takes to make the UL guaranteed. Unfortunately with today's interest rates, very few traditional ULs are able to be fully guaranteed without a Rider of some type (or making the policy a MEC). Of course GUL is excluded from that last comment.

 

[DHK]

scagnt83 is correct. As long as the illustration shows the guaranteed columns going out to whatever age you are looking for, and the policy is properly funded, then THAT is guaranteed.

In the vast majority of cases, when the words 'guaranteed' and 'UL' are involved, it's usually a guaranteed MINIMUM payment to keep the policy in-force in a GUL, or more accurately a Non-Lapse GUL. The purpose of these policies is a MINIMUM payment to be made every year to keep the policy in-force. They have little to no cash value accumulation.

I think it's very rare to have a true "paid up" UL policy. Not saying it can't be done, but that it is rare.

yelchevelle, like you, I also prefer whole life over the UL chassis. The contractual guarantees along with the possibilities of a true RPU option ensures that some kind of death benefit can be guaranteed to be paid out.

It's just that sometimes, like in this thread, some terminology gets mixed up between the two.

I can tell with your post that you are very conscientious about what you do for people, so that's very good! We need more agents like you serving clients.

 

[BYSFG]

Yelchevelle, I am in the same boat in regards to train of thought. I as well do not want that said or have to face that situation you described in years to come.

Especially with No Lapse/GUL and the way I ran it, with what DHK pointed out and clarified about the illustration software, how I ran it really doesn't sit well with me. Much work for me to be done. The way I had illustrated it, even ANICO home office had it illustrated where premiums were continuously to be paid til maturity. Premium was of course based off of premium being guaranteed to age 65, so it ends up being higher priced compared to what it would have originally been if it was premium solved/ premium guaranteed to 121, even though the death benefit runs or is illustrated to maturity. Thank goodness other carriers had in fine print for their GUL that "just because it's 0 in the premium outlay, does not mean that the policy is paid up."

Now going forward, may just run it based on premium solve/ premium guarantees for 121. Minimum payments to keep it in force.

Currently revisiting Brokers Alliance videos about shadow accounts. Seems the more you think about it, the more lost you get.

Really appreciate all the comments and insights, once again thanks everyone.

 

[mwpuck01]

this is the paid up ul i can illustrate. Guarenteed DB to 120.

 

[DHK]

Nope. That's not guaranteed by any means.

On the guaranteed columns: Policy runs out by age 53, or policy year 24.

On the non-guaranteed columns: Policy runs out by age 68, or policy year 39.


Do you know how to read and interpret an illustration? Once premiums stop, and policy cash values are zero, the policy implodes because there are no reserves to sustain the policy.

Just because it PRINTS to age 121, doesn't mean it LASTS to age 121.

 

[scagnt83]

Nope. That's not guaranteed by any means.

On the guaranteed columns: Policy runs out by age 53, or policy year 24.

On the non-guaranteed columns: Policy runs out by age 68, or policy year 39.


Do you know how to read and interpret an illustration? Once premiums stop, and policy cash values are zero, the policy implodes because there are no reserves to sustain the policy.

Just because it PRINTS to age 121, doesn't mean it LASTS to age 121.

You need to look at that illustration again. He is correct, it is Guaranteed to age 100.


It is not a "traditional" UL. It is basically UL with a Guaranteed Rider.... except they have just bundled the Rider up into the policy.


The DB prints until age 121. Also read the Premium explanation.... it says that the Premiums Guarantee the DB to death.

 

[DHK]

Ah!

Your Selected Premium Outlay, including any lump-sum premiums, is the amount of premium assumed to be paid by the policy owner or other premium payer out of pocket. Values would be different if premiums are paid with a different frequency or in different amounts. Premium is assumed to be paid at the beginning of the period for the mode shown.

Based on the Selected Premium Outlay as shown in the yearly detail pages, the coverage is guaranteed to stay in effect until the death of the insured.

The devil is always in the details.

I apologize for misinterpreting your illustration.

 

[BYSFG]

View attachment GUL Sample.PDF

I know Im beating a dead horse at this point, but what would the take be on the above?

Unfortunately it doesnt feel as straight forward as mwpuck01's illustration in terms of language compared to WSL.

 

[DHK]

I'm beginning to learn some new things in this thread.

10 Year Minimum Premium Guarantee

This policy will not lapse during the first 10 years it is in force, even if it does not have sufficient Surrender Value to cover the monthly deductions, if the minimum premium requirement is paid. If you take a loan or withdrawal during the first 10 policy years, this guarantee may not keep your policy in force without the payment of additional premiums. If the policy lapses and is reinstated this guarantee will be permanently lost.

No-Lapse Guarantee Account (NLG Account)

After the 10th policy anniversary, this policy will not lapse, even if it does not have sufficient Surrender Value to cover the monthly deductions, if the NLG Account is greater than or equal to zero. The NLG Account value is determined by the NLG charges and credits, fully described in the policy. The value in this account is not available to you, rather its only purpose is to determine if the policy remains in-force. Note, the intended guaranteed death benefit duration of 87 years shown in this proposal may vary due to changes in premium frequency, timing or amount from the planned premium shown, withdrawals, decreases in Specified Amount or the addition or removal of Riders. The NLG Account will not prevent lapse if there is an outstanding loan. If there is an outstanding loan, then the policy will lapse unless the Surrender Value is sufficient to cover the monthly deductions.

You may make additional premium payments necessary to keep the NLG Account positive at any time the policy is in-force. However, if the policy lapses and is reinstated, this provision will be permanently lost. The NLG Account includes a late-payment forgiveness feature to help keep your account on track by treating any premium received within one policy month of the premium due date as though it was received on the premium due date for the purposes of calculating the NLG Account value.

Bottom line: Don't take loans from this policy.

This has been quite an education for me lately.

 

[BYSFG]

My understanding so far with multiple conversations, back and forth and now receiving new policies out of the blue is that based on that example, the client would pay until age 65, where as coverage is guaranteed to 121 since it wasnt dialed down. Probably will make one last phone call and see if I can get everything answered. Getting kind of ridiculous.

Im glad Im not the only one getting a good schooling out of this DHK. I dont know how many hours Ive spent doing research and watching videos.